Celebrity tax scheme that pledged to invest in films runs up £7m legal bills in battle to fend off HMRC

Ingenious, the firm behind a £2billion film investment scheme which Revenue & Customs views as designed to avoid tax, has told investors it is racking up huge legal bills.

Ingenious’ founder Patrick McKenna wrote to investors, who include some of the wealthiest people in the UK, to say that Ingenious has so far spent £7 million on legal bills in the run up to a tax tribunal due in November.

The tribunal will examine whether the schemes that attracted £2 billion a year at their height were mainly about film production and run ‘with a view to a profit’ – a key definition for tax purposes – or were set up to avoid tax.

Investors could defer paying tax for 15 years, allowing them to make more than the sum owed in the meantime.

Huge numbers of very wealthy people invested in the schemes, including television presenter Anne Robinson, film director Guy Ritchie and footballers David Beckham, Wayne Rooney and Steven Gerrard.

Ingenious has battled the Revenue for years and under new rules enacted this month its investors could receive ‘accelerated payment notices’ demanding payment.

McKenna told investors Ingenious had ‘devoted very substantial resources’ to the litigation while noting the firm had ‘engaged the best legal team to advise us on this dispute’. He wrote: ‘We remain confident of our position and have already incurred £7 million in legal and other costs in supporting the litigation.’

A number of leading investors are not waiting for the result of the tax tribunal, but have already settled their bills with the tax authorities.